consumer rationality

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consumer rationality


economic rationality

the assumption, in demand theory, that CONSUMERS attempt to obtain the greatest possible satisfaction from the money resources they have available when making purchases. Because economic theory tends to sum household demands in constructing market DEMAND CURVES, it is not important if a few households do not conform to rational behaviour as long as the majority of consumers or households act rationally. See ECONOMIC MAN.
References in periodicals archive ?
Rotheli [2007] takes an econometric approach to examining the issues of consumer rationality, expectations, and decision making in the face of uncertainty.
The traditional interpretation, and its consequent neoclassic axiomatization, of the concept of consumer rationality, refers to the supposed that prevents the consumers to act in an inconsistent way, in other words prohibit the contradictory elections.
In the general case when preferences are not homothetic, the dynamic restriction on the real profit of firms in equation (1b), together with menu cost and the assumption of consumer rationality which results in demand functions which are homogeneous of degree zero in prices and income, imposes a constraint on the movements of all prices in the economy.
It simply states that capital market perfection, consumer rationality, and menu costs together are sufficient to guarantee that firms will not be able to move prices at will.
In the earlier section I demonstrated that capital market perfection, consumer rationality, and menu costs require all prices in an industry to move together.
Weak gross substitutability, together with consumer rationality, is known to be sufficient for the global stability of Walrasian equilibrium [10].
That is, prospect theory explains behavior that cannot be explained through assuming consumer rationality, the maximization of a stable utility function.
The empirical results support prospect theory and are contrary to two conclusions from neoclassical models of consumer rationality.
Neo-classical consumer rationality predicts a higher minimum acceptable subsidy on two grounds: the subsidy is in the future rather than at the time of purchase, and the receipt of the subsidy is subject to some risk of default.
That consumer rationality does not govern purchases of electricity-saving equipment reveals a need for responsible marketing.
In my opinion, the book delivers much less than the jacket promises: "how the architecture and evolution of the mind affect human value formation, consumer behavior, and consumer rationality.

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